Manohar Lal Batra v. Income-tax Officer, Ward-2, Hisar
[Citation -2016-LL-0928-10]

Citation 2016-LL-0928-10
Appellant Name Manohar Lal Batra
Respondent Name Income-tax Officer, Ward-2, Hisar
Court ITAT-Delhi
Relevant Act Income-tax
Date of Order 28/09/2016
Assessment Year 2010-11
Judgment View Judgment
Keyword Tags furnishing of inaccurate particular • termination of his employment • denial of exemption • leave encashment
Bot Summary: The only grievance of the assessee in this appeal relates to the denial of exemption u/s 10(10) of the Income Tax Act, 1961 out of the amount received by the assessee towards arrear of gratuity to the extent of Rs.6,50,000/-. In view of the discussion in the foregoing paras income of the assessee is computed as under Returned income : Rs.3,18,600/- Addition on accou nt of gratuity as di scu ssed above : Rs. 6.50.000/- Assessed Incom e : Rs.9,68,600/- Charge interest u/s 234B of the Income Tax Act, 1961 withdraw interest u/s 244A(3), if any. Counsel for the assessee at the very outset stated that the issue under consideration has already been decided by the various benches of the ITAT New Delhi in favour of the assessees wherein identical facts were involved. In so far as the addition on account of gratuity received by the assessee amounting to Rs.6,50,000/- is concerned, it is found that the case of the assessee is that this amount falls u/s 10(10)(i) of the Act. Since the original amount was received by the assessee during the currency of an earlier year on his retirement, the exemption limit prevalent at that time at Rs.3,50,000/- was used by the assessee. Page 32 of the paper book is copy of the assessee s Pension Payment Order, which depicts the assessee s designation as Sr. Scientist, Department of Plant Breeding. On the Pensioner s Portion of this document, there is a reference to Rule 10, 11 and note thereunder of Civil Services Rules V.II. As the assessee s pension has been computed under Civil Services Rule, it goes to show that the assessee was holding a civil post at the time of his retirement.


IN INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-1 , NEW DELHI Before Sh. N. K. Saini, Accountant Member ITA No. 2180/Del/2016 : Asstt. Year : 2010-11 Manohar Lal Batra, Vs Income Tax Officer, H. No. 1613, Sector-13, Hisar, Ward-2, Haryana Hisar (APPELLANT) (RESPONDENT) PAN No. AAWPB5323P Assessee by : Sh. Kuldeep Khera, CA Revenue by : Sh. F. R. Meena, Sr. DR Date of Hearing : 22.09.2016 Date of Pronouncement : 28.09.2016 ORDER This is appeal by assessee against order dated 28.01.2016 of ld. CIT(A), Hisar. 2. only grievance of assessee in this appeal relates to denial of exemption u/s 10(10) of Income Tax Act, 1961 (hereinafter referred to as Act) out of amount received by assessee towards arrear of gratuity to extent of Rs.6,50,000/-. 3. Facts of case in brief are that assessee was employee of Choudhary Charan Singh, Haryana Agricultural University, Hisar and received arrear of Death cum retirement gratuity of Rs.6,50,000/-. assessee filed return of 2 ITA No. 2180/Del/2016 Manohar Lal Batra income on 30.07.2010 declaring income of Rs.9,68,600/-. Thereafter, assessee revised return of income on 15.09.2011 declaring total income of Rs.3,18,600/- which was processed u/s 143(1) of Act on returned income. AO observed that assessee in computation of total income annexed with return of income, details of receipt of arrears of gratuity and detailed note on payment of Gratuity, Leave Encashment and LTC etc. AO did not allow claim of assessee for exemption of Rs.10,00,000/- received on account of gratuity and restricted same to Rs.3,50,000/-. Accordingly, income was assessed at Rs.9,68,600/- by observing as under: In view of finding given in foregoing paras, employee of CCS HAU cannot be termed as Govt. employee as neither they are under control of Haryana Govt. nor their pay is debited to consolidated funds of state. Application of CSR Vol. II does not confer vice-versa status as Govt. employee under any rule/authority as claimed by assessee. Hence, it is clear that university employees are covered u/s 10(10)(iii) of Income-tax Act, 1961 because neither sec. 10(10)(ii) applies as they are not receiving gratuity under payment of gratuity Act 1972 nor from gratuity funds mentioned u/s 10(10)(i) of Act. In view of these facts, exemption allowable to assessee in respect of gratuity and leave encashment is only Rs.3.5 lacs and Rs.3,00,000/- respectively which has 3 ITA No. 2180/Del/2016 Manohar Lal Batra already been claimed/ allowed. Thus, claim of assessee for exemption of gratuity received in arrear of Rs. 6,50,000/- is not in order and is added back to income of assessee. Penalty proceedings u/s 271(1)(c) are initiated for furnishing of inaccurate particular of its income. In view of discussion in foregoing paras income of assessee is computed as under Returned income : Rs.3,18,600/- Addition on accou nt of gratuity as di scu ssed above : Rs. 6.50.000/- Assessed Incom e : Rs.9,68,600/- Charge interest u/s 234B of Income Tax Act, 1961 withdraw interest u/s 244A(3), if any. Issue penalty notice u/s 271(1)(c) of Income Tax Act,1961. 4. Being aggrieved assessee carried matter to ld. CIT(A) who sustained addition made by AO by observing in para 5.10 of impugned order as under: 5.10 Considering above discussion I hold that employees of University are not holders of civil post under state and are not eligible for exemption u/s. 10(10)(i) of Income Tax Act. They are not covered by Section 10(10)(ii) as they are not receiving gratuity under payment of gratuity Act, 1972. Hence, employees of University are covered U/s. 10(10)(iii) of I.T. Act for which there is limit on gratuity amount allowable. CBDT has approved 4 ITA No. 2180/Del/2016 Manohar Lal Batra notification of Rs. 10 lakhs on maximum amount of gratuity u/s. 10(10)(iii) of Income Tax Act vide its notification no 43/2010 dated 11.06.2010. This notification is applicable to employees who retire on or after 24.05.2010. Before 24.05.2010 exemption u/s. 10(10)(ii) was restricted to Rs. 3,50,000/-. Therefore, I hold that appellant who retired before 24.05.2010 is eligible for exemption on gratuity to extent of Rs. 3,50,000/- only. additions made by AO of Rs. 6,50,000/- on account of excess claim of gratuity are upheld. appeal on this ground is dismissed. 5. Now assessee is in appeal. ld. Counsel for assessee at very outset stated that issue under consideration has already been decided by various benches of ITAT New Delhi in favour of assessees wherein identical facts were involved. He furnished copies of following orders: Sh. Ram Kanwar Rana Vs ITO, Ward-3, Hisar in ITA No. 1307/Del/2016 dated 16.06.2016 Sh. Raghubir Singh Panghal Vs ITO, Ward-3, Hisar in ITA No. 1308/Del/2016 dated 16.06.2016 Sh. Joginder Paul Bhanot Vs ITO, Ward-2, Hisar in ITA No.1219/Del/2016 dated 19.07.2016 Sh. Bhupendra Kumar Nehra Vs ITO, Ward-1, Hisar in ITA No. 1222/Del/2016 dated 20.07.2016 Sh. Ram Dhari Rana Vs ITO, Ward-3, Hisar in ITA No. 1360/Del/2016 dated 10.08.2016 Sh. Anant Kumar Gupta Vs ITO, Ward-1, Hisar in ITA No. 1361/Del/2016 dated 10.08.2016 5 ITA No. 2180/Del/2016 Manohar Lal Batra 6. In his rival submissions ld. DR supported orders of authorities below. 7. I have considered submissions of both parties and perused material available on record. It is noticed that identical issue having similar facts has already been adjudicated by ITAT Delhi Benches, SMC-1 , New Delhi in ITA No. 1307/Del/2016 for assessment year 2010-11 in case of Ram Kanwar Rana Vs ITO, Ward-3, Hisar, wherein relevant findings have been given in paras 4 to 8 of order dated 16.06.2016 which read as under: 4. I have heard rival submissions and perused relevant material on record. controversy in this appeal can be viewed separately in respect of receipt of gratuity amount and leave encashment. In so far as addition on account of gratuity received by assessee amounting to Rs.6,50,000/- is concerned, it is found that case of assessee is that this amount falls u/s 10(10)(i) of Act. On contrary, Revenue has treated it as case falling u/s 10(10)(iii). In order to appreciate rival contentions in right perspective, it will be apposite to set out relevant parts of section 10, as under :- (10) (i) any death-cum-retirement gratuity received under revised Pension Rules of Central Government or, as case may be, Central Civil Services (Pension) Rules, 1972, or under any similar scheme applicable to members of civil services 6 ITA No. 2180/Del/2016 Manohar Lal Batra of Union or holders of posts connected with defence or of civil posts under Union (such members or holders being persons not governed by said Rules) or to members of all-India services or to members of civil services of State or holders of civil posts under State or to employees of local authority or any payment of retiring gratuity received under Pension Code or Regulations applicable to members of defence services ; (ii) .. (iii) any other gratuity received by employee on his retirement or on his becoming incapacitated prior to such retirement or on termination of his employment, or any gratuity received by his widow, children or dependants on his death, to extent it does not, in either case, exceed one-half month's salary for each year of completed service, calculated on basis of average salary for ten months immediately preceding month in which any such event occurs, subject to such limit as Central Government may, by notification in Official Gazette, specify in this behalf having regard to limit applicable in this behalf to employees of that Government : .. Provided further that where any such gratuity or gratuities was or were received in any one or more earlier previous years also and whole or any part of amount of such gratuity or gratuities was not included in total income of assessee of such previous year or years, amount exempt from income-tax under this clause shall not exceed limit so specified as reduced by amount or, as case 7 ITA No. 2180/Del/2016 Manohar Lal Batra may be, aggregate amount not included in total income of any such previous year or years. 5. careful perusal of above provision indicates that if case falls under clause (i) of section 10(10), entire amount of death-cum-retirement gratuity becomes exempt. Au contraire, if case falls under sub-clause (iii) of section 10(10), then, exemption is limited to amount as Central Government may notify in official gazette. It is accepted position that Notification u/s 10(10)(iii) issued on 24.5.2010 raised ceiling of exemption from Rs.3,50,000/- to Rs.10 lac. Since original amount was received by assessee during currency of earlier year on his retirement, exemption limit prevalent at that time at Rs.3,50,000/- was used by assessee. It is nobody s case that extended limit of exemption can be applied to assessee, because of his retirement which took place much before cut-off date. To be more specific, question is as to whether extant case falls under clause (i) or clause (iii) of section 10(10). If case does not fall under clause (i), it will automatically go to clause (iii). On specific query from Bench, ld. AR submitted that case of assessee should be considered under sub-clause (i) of section 10(10) as holder of civil post under State. In order to construe any person as holder of civil post under State, two requirements must be fulfilled viz., first that employee should be holding civil post and, second, such civil post must be under State. 6. first condition is that employee should be holding civil post. assessee was appointed as Research Assistant in December, 1971, who eventually 8 ITA No. 2180/Del/2016 Manohar Lal Batra rose to post of Head of Department, Plant Breeding Department at time of his retirement. Page 32 of paper book is copy of assessee s Pension Payment Order, which depicts assessee s designation as Sr. Scientist, Department of Plant Breeding. On Pensioner s Portion of this document, there is reference to Rule 10, 11 and note thereunder of Civil Services Rules (CSR) V.II. As assessee s pension has been computed under Civil Services Rule, it goes to show that assessee was holding civil post at time of his retirement. No other contrary material has been placed on record by ld. DR to show that assessee was holding post other than civil post. 7. second requirement is that such civil post must be under State. Page 20 of paper book is copy of Haryana and Punjab Agricultural University Act, 1970, which was passed by Parliament and received assent of President on 2 nd April, 1970. Under this Act of Parliament, two independent agricultural universities in place of hitherto Punjab Agricultural University, were established. Section 5 of this Act sets out name of CCSU as agricultural university to function within territories of State of Haryana. This proves that CCSU was established by Act of Parliament. Page 29 of paper book is document which shows that assessee is State University covered under University Grants Commission (UGC). It is undisputed that entire funding of CCSU is done by State Government. Page 25 is copy of Notification issued by Haryana Government increasing maximum limit of death-cum-retirement gratuity at Rs.10 lac, under which assessee has 9 ITA No. 2180/Del/2016 Manohar Lal Batra received arrears of retirement gratuity under this scheme only. above facts amply demonstrate that CCSU is covered under expression State. This is further corroborated from Article 12 of Constitution of India which states that: In this part, unless context otherwise requires, State includes Government and Parliament of India and Government and legislature of each of States either local or other authorities within territory of India or under control of Government of India. expression other authorities has been interpreted in Umesh v. Singh 1967 Pat. 3(9) F.B. as including: Board, University, Chief Justice of High Court, having power to issue rules, bylaws or regulations having force of law. above discussion manifests that CCSU is covered within meaning of State . 8. As assessee is found to be employee holding civil post under State, in my considered opinion, provisions of section 10(10)(i) are fully attracted in this case entitling him to exemption for amount under consideration. Once case falls under clause (i) of section 10(10), same cannot be brought within purview of clause (iii) of section 10(10). I, therefore, hold that assessee is entitled to exemption u/s 10(10)(i) in respect of gratuity amount received in total upto Rs.10 lac, which covers sum of Rs.6,50,000/- received during year. Overturning impugned order on this score, I allow exemption u/s 10(10)(i) to arrears of gratuity received by assessee at Rs.6,50,000/- during instant year. 10 ITA No. 2180/Del/2016 Manohar Lal Batra 8. Since facts of assessee s case are identical to facts involved in aforesaid referred to case of Sh. Ram Kanwar Rana. So, respectfully following order dated 16.06.2016 in case of Ram Kanwar Rana Vs ITO (supra), impugned order is set aside and AO is directed to allow claim of assessee on account of gratuity. 9. In result, appeal of assessee is allowed. (Order Pronounced in Court on 28/09/2016) Sd/- (N. K. Saini) ACCOUNTANT MEMBER Dated: 28/09/2016 *Subodh* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5.DR: ITAT ASSISTANT REGISTRAR Manohar Lal Batra v. Income-tax Officer, Ward-2, Hisar
Report Error